The role of HC in Venture investing

In today’s episode Rajinder (Director, Matrix Partners India) and Debleena Das (Vice – President, Human Capital) walk us through learnings and insights on team building & hiring at the early stages.

Debleena:

Hi, Rajinder. Good to do this podcast with you today. You have done a few but this is the first time I’m doing it. We often joke in the team that venture capital is basically human capital, why do we say that? The philosophy behind this is that venture capital evaluate people and ideas and human capital is also evaluating people and their skills through their ideas and track records.

Rajinder:

Deb, thanks and good to do this with you. You’ve been part of building the Human Capital team at Matrix and you’ve been part of multiple teams over the years, Google, InMobi, Flipkart, and frankly you’ve had more than 40 founders that we worked with over the years to build market building teams. So I’m actually very excited to do this with you and I’m going to redirect many of the questions back to you. I agree with your assertion in some ways; I think there are a lot of similarities between venture capital and human capital. But let’s take a step back, I think the startup and VC ecosystem has changed significantly since five years ago. You know, five years ago if I look back there was a lot of capital available for innovative founders and ideas but the talent was somewhat scarce. Now we’re in an environment where capital is frankly freely and abundantly available and there’s also a much larger bench of experienced talent. So what then truly differentiates companies is it’s going to come down to the speed and quality of execution that founders can actually drive. And if you want to be one of those companies that scales really fast then you need to build teams that scale. This is obviously therefore one of the qualities that we look for in founders when we’re evaluating their companies and thinking about whether we want to partner with them. And asking ourselves this question whether they can truly attract smart and capable people to work for them. This isn’t easy, I’m not going to lie, I think this is exactly why we built the capability within Matrix because getting high quality talent, getting these rock-stars to join a young company can be very challenging given the options that they have. But if you can do it then frankly it can be game changing for a startup. So, yeah, long answer, hopefully it answers your question.

Debleena:

Absolutely. I think that directs the question how do you convince a rock-star to join a young or growth stage startup?

Rajinder:

I thought that’s what you were going to talk about but --

Debleena:

Sure, sure.

Rajinder:

A quick plug here for my colleague Vikram’s podcast, I think he’s done one earlier which we should add links to here at the bottom of this one on Extreme Hiring. I think he talks about some simple rules. One is get your first ten L minus one hires fast, right, don’t solve for the perfect hire, solve for speed. When you’re trying to find these ten first hires rule number two is select them based on their intrinsics and their overall match with the DNA of the company that you’re trying to build. Pedigree, capability, all of these will be good ways to filter but frankly if you go really deep on that the best way to actually figure some of that out is actually through references. What you need to do is really figure out whether their intrinsic match with your company DNA and that’s rule number three, right, which is if you’re going to overweight intrinsics and DNA then you want to validate the capability through references and reference check like help basically to make sure that the capability is real. I’m going to add a few more rules which I think is super important and this is how to manage life beyond the first ten hires. Rule number four is when you’re hiring hire people who believe in the team and believe in the idea in addition to of course believing in you the founder. The reason I say this is because conviction in one may at some point of time falter but if someone is truly convinced about all three then rock-stars will very rarely leave because they really believe in sticking together with their tribe. Rule number five and this one I personally believe in strongly having come from organizations like this which is create a strong grow from within culture, many people are faced with this choice, founders are faced with this choice early on which is maybe the first few hires I will really hire for capability and intrinsics and DNA but beyond a point how many senior lateral hires do I really need in my company especially at a very early stage. And this is where I would strongly advise people to actually craft some version of a management training program for yourself. Hire young people into your company especially in like sales, operations, BD kind of roles and then really grow from within, help people succeed internally, promote them internally, year 2 folks get year 1 management trainees to work with but this is just frankly a consistent trait across all high performing organizations, this whole grow from within culture. Which isn’t to say don’t hire expertise laterally but if you’re hiring someone laterally into a role you really have to raise the bar because this person is someone who will come from a different culture, will come from a different DNA and so the bar needs to be high to kind of hire someone from outside. Rule number six and this is again non intuitive, I would say get your employees to become super active on social media. If it’s – obviously sales, ops, marketing, LinkedIn is a great platform, Twitter is a great platform. And if it’s on the tech side then you know you want to get really active on GIT or other online communities wherever similar folks are spending time, contribute to online depositories. I think it helps to build the employer but I’m phenomenally right, I think market is --

Debleena:

Basically you’re referring to a talent magnet kind of setup.

Rajinder:

Yeah. I mean think about it, right, the market is competitive. Rock-stars only want to work with other rock-stars and how do they judge whether this company has great people, I mean maybe they can connect with the founder but frankly they all realize that on a day to day basis it’s about the rest of the org as well. And if they don’t know who those folks are, who those rock-stars are the best way for them to get familiar is really through content and what people are putting out there on social media. I think get everyone in your company to build their brand, obviously it has to be consistent with what the company stands for but with enough of a distinct point of view to be able to attract other rock-stars. Final rule that I’m going to -- and then I’m going to hand it over back to you, I think invest big time in training and onboarding, I think what happens is people generally leave training to the manager, I personally don’t believe that model works. I think you need to get the entire leadership team involved in onboarding new folks. There should be no formal training without senior leaders of the firm being involved and investing time in training. Who the rock-stars meet in the first few weeks really changes how they integrate and perform. And when a rock-star joins and sees that the senior leaders of this company are actually committed to their success they’re going to go tell 20 other friends of theirs saying, boss, this company is really committed to building a high-quality org. So I would say it’s hard to do purely one on one which is where it connects back to my earlier comment on maybe craft a management trainee program or some version of that because then you can do this at scale, right, you can do 1:10, 1:20, 1:30. One of the companies I had the privilege of working with OfBusiness actually hires about 40 odd management trainees, 40-50 odd management trainees every year. So it doesn’t drag productivity down in fact it boosts productivity because they’re doing high impact kind of training programs, everyone’s kind of joining at the same time. There’s a lot of camaraderie and they then go and tell 20 of their friends saying, boss, this company is like just outstanding, you need to be part of the story. You know, I actually want to turn it to you. I’m sure there are enough examples from your experience.

Debleena:

Absolutely. I was just thinking when you were talking and I actually kind of relate to some of this and I want to share my experiences here too. Probably what you said and well consolidated let me take two live case studies or real examples, it will be easier to explain. So one of our Ed Tech company, Camp K12, it is basically an online Ed Tech platform targeting youngsters to nurture their interest in learning programming, coding etcetera. Here the problem was it is a growth stage startup in Ed Tech pre-Covid. And we all know that pre-Covid Ed Tech was not that much in hype, suddenly after post Covid everybody wanted to go in Ed Tech. Now here finding someone who is super talented and as passionate about the idea of the founder like the founder he himself is that was really tough and challenging. How we solved that problem, so we naturally built a strong network and relationship in the ecosystem and that definitely helped here. The candidate who we hired was actually someone who was in touch with us for long time and we nurtured the relationship over the period of time in general irrespective of any kind of particular opportunity. When this opportunity arrived through multiple discussions with us, with our team and with the founders he got more excited about the idea of Camp K12 and their vision. So it was aligned and having the strong inbound network in the funnel and the matching rock-star to the right companies that they are truly excited about that’s something really worked here.

Rajinder:

Yeah, good example. I think I can relate to it because lot of people want to join the Ed Tech sector once this --

Debleena:

Post Covid, yeah.

Rajinder:

But very, very different kind of people got attracted to this sector before – yeah, fully recognize the point you’re making.

Debleena:

Yeah. The other interesting example is it is about a real time money gaming company in our portfolio called Zupee. They’re a skill-based gaming company; here the problem was the domain itself is highly competitive. The founders and we spent some time, we agreed to hire someone who has strong domain experience plus strong intrinsic and naturally they should be keen in the gaming even if they’re coming from general consumer internet kind of background. So, well, in gaming there are some nuance generally a gaming product leader they have certain unfair advantage and they’re able to adapt their play book to a new gaming much faster than someone from the outside of the industry let it be how the game design should be or what is the consumer’s psychology, how we present the gaming. Because it should be very eye catching, how to sell that? What analytics they can bring to make the product more efficient and bring the product in the next game. But in engineering side on the other hand you actually need to really just zero in on intrinsic from any consumer internet background. Now the question here was the technology to be built for massive scale before has he done that, because here it will be like millions of clicks or users we are expecting in few seconds gap. This insight through trivial can save companies a lot of time and the money especially in a highly competitive market environment where you can imagine if we’re losing 3-6 months of time due to a wrong hire that can make a significant difference between winning and losing. So we aligned the founder on what works with our strong suggestions but let me remind here not to be anywhere prespective ever because founders they have the best ideas about their companies and they know it better what to do. So kept the search narrow only to the cream layer of the talents and eventually credit to the good founders who knew what worked best for them.

Rajinder:

Yeah. So I guess good examples again, I think what you’re saying is know the rock-stars out there so you don’t have to go and find them every time you need them and make sure you’re matching the rock-star to the right role and right company.

Debleena:

Yes.

Rajinder:

Because, I guess people do fit in some ways.

Debleena:

As we often joke there is no bad talent; it is matching the right talent with a right set of companies or the founders.

Rajinder:

So tell me, I think market is obviously getting more competitive right there and you’re on the frontlines talking to a lot of these rock-stars and they have lots of choices. How do you manage to convince them?

Debleena:

Of course the talent pool they have lot of choices but interestingly what I’m seeing that the founders also have choices too and that a paradigm is slowly shifting.

Rajinder:

Okay, maybe that ties back to what I was saying earlier which is that the market has in some way shifted. But then how do founders pick like let’s say they have like multiple interesting folks to kind of talk to what is your advice?

Debleena:

I think one thing on top of my mind is definitely a reference check; that is one primary point as an organization, as an individual, we all believe in. So let me tell you that here for the other listeners also there are three golden rules of the referencing, actually extreme referencing. Speak to a trusted source who has exposure working with the person for a long period of time so that they have seen the journey, they have seen the growth not in very short time duration. Ask difficult questions to those referrers and try to read between lines or try to get the perspective what they’re saying and what they’re not saying to figure out what is the entire picture on the talent, on the particular candidate you were getting. The third thing is the pattern identification, when let’s say we’re doing sometimes three, four, five or more than that in fact reference checks. Something is coming out repetitively in any of the reference checks that is either a red flag or not a red flag we need to dive deep there. We need to find the pattern and use it for both the parties, like we use it for the candidate’s growth as well as what the founder should expect and what to be prepared with. I think those are absolutely important. Another effective thing I think that is working with different experts in their specialized skills areas like advisors, they have seen lot of channels. They have built companies, they have seen success and failure so basically seeking their help and including them in the entire process of this journey that gives a certain edge. Sometimes we might not be able to let’s say figure out that how a person is good enough for a tech or a data science or a finance related core skills. But bringing an expert there and getting their view that really helps. So our ability to bring this network together gives the founder fantastic leverage in my opinion and that enables the company’s ability to move faster. We invested in ideas like tech circle, data science, product, generalist like business side. By the way another fantastic byproduct I remember of this reference for finding a matching rock-star, so when you know people when you invest in that network they automatically route the most talented people towards you because they know whom to be connected with. Build a pipeline of rock-star for a long term vision and keep adding into that pipeline through networking, I think there is no alternative for that.

Rajinder:

Oh, thank you, I guess you put it well so I guess if I have to summarize what I’m taking away is hiring rock-stars isn’t easy, there’s a play book of course in terms of moving with speed especially at the start then the rules that I added around building the right team, growing from within, getting active. But frankly I think the biggest takeaway for me based on what you’re sharing is actually how do you integrate kind of experts in the network more broadly into the overall talent acquisition kind of team building journey. Because if you pull people from outside the company into your success as much as you’re kind of trying to add, trying to drive success through the people who are already at your company frankly that’s like the internal flywheel also working and the external flywheel working for you. So frankly it’s a very, very interesting take on things worth a little more thought from our side but appreciate you putting this together.

Debleena:

And the last insight is that great talent always wants to stay connected with their peers across companies. Pulling these folks into a network or a brain trust is super important according to me especially during times like Covid when people wanted to know like how engineers or PMs at another company they’re solving problems for scale, for reliability, motivation, etcetera. The Human Capital team at Matrix is able to bring this network together so as to give founders leverage and ability to move faster with a tight knit community of highly capable people.

Another fantastic byproduct of this whole networking talent engagement forum is finding references for other emerging rock-stars. Hiring is hard, you know, hiring rock-stars are even harder but through consistent and simple steps one can build a pipeline of rock – star for your long-term vision.

Rajinder:

That’s very well put, Deb, I think I’ve always thought of the internal flywheel and that’s the flywheel that I referred to at the start which was about getting the right people into the company and giving them the right training and onboarding, making sure that you have a growth from within culture, you have this management training program. But frankly you’ve added another dimension which is this external flywheel which is how do you actually bring experts into your community, how do you ensure that you’re engaging with talent across companies in these knowledge/networking forums. Frankly if you have the internal flywheel working for you and if you have the external flywheel working for you I think any startup or company will be unbeatable from a talent acquisition perspective. So, thank you, lots of food for thought.

Debleena:

Thank you so much Rajinder for doing this today, thank you.

Salonie:

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